Budget to cut social welfare by 4% and child benefit by up to 10%

MINISTER FOR Finance Brian Lenihan will announce reductions of 4 per cent in social welfare payments, and cuts of between 9 and 10 per cent in child benefit, when he announces the budget on Wednesday.

Cuts in social welfare will be applied across the board with the exception of pensions, which will remain untouched. The reductions will mean a reduction of €8 in dole payments from the current level of just over €200. In addition, any person under 23 who refuses to participate in a jobseeker’s course will see their payments cut by 20 per cent, or more than €40.

It also emerged yesterday that the reductions in the public sector pay bill will be proportionately larger for those on higher incomes.

While the Government has said the average cuts in public sector pay will be between 5 and 6 per cent, those on higher salaries of €100,000 or more can expect cuts of more than 7 per cent while those on the lowest salaries will have cuts below the average. That means that Dáil deputies will be among the cohort whose salaries will fall by €7,000 or more.

Professional such as doctors, lawyers and engineers providing services to the State are also expected to have their fees reduced by 5 per cent.

Minister for Foreign Affairs Micheál Martin last night confirmed that the Government would differentiate between lower and higher earners in the public sector.

Speaking on RTÉ’s
Week in Politics, he outlined how the cuts would be applied. “Obviously we will be looking at a tiered approach in relation to it.”

Mr Martin also said that the budget would be tough, but would show the economy was moving in the right direction. “It will generate confidence that Ireland has the capacity to deal with the severe problems facing us and that the Government has the resolve to meet those problems face on,” he said.

Separately, the Government confirmed yesterday that the latest report of the Review Body on Higher Remuneration will be incorporated into Mr Lenihan’s budget speech on Wednesday. The group has recommended significant pay cuts including a cut of 20 per cent, or €57,000, in Mr Cowen’s salary, reducing it from €285,000 to €228,500.

He has already taken a voluntary 10 per cent cut in salary as have all his Cabinet colleagues.

The report also recommends that ministerial salaries be cut by 15 per cent from €225,000 to €191,000 and for similar cuts of 15 per cent in the pay of the highest ranking civil servants, secretaries general. Their pay will be €242,000 after the budget, above that of the Taoiseach.

The reductions in child benefit will be in the region of €15 a child a month, reductions that will result in a family with two children losing €360 per annum. Those on social welfare will be entitled to recoup benefits.

The Department of Finance gave no indication yesterday if mooted increases in taxes for those earning €150,000 will be announced by Mr Lenihan on Wednesday, or if the PAYE ceiling of €75,000 will be abolished. While Finance is believed to oppose any new taxes other than the carbon tax, the high-income levy has formed part of both Cabinet and pay discussions.

In the continuing fall-out from the collapse of the pay talks, secretary general of the Irish Congress of Trade Unions David Begg yesterday said he unpaid leave proposal would have resulted in almost €1 billion in pay reductions. Mr Begg said social partnership was no longer feasible.

“When the Taoiseach spoke on the steps of Government Buildings at four o’clock on Friday, he didn’t just cut the ground from under these negotiations, he also drove down the model of social partnership that we’ve had for 22 years.”